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Thinking of investing in the stock market? Here's your ultimate guide towards safe investments
Who doesn't want his or her capital to grow? There are many ways through which people invest their hard earned money to get maximum profits. Investing in the stock market is one such means for any individual or institution for achieving efficient growth of monetary funds.

However, unfortunately, very few of us have proper knowledge of the share market or the correct way of investing despite it being a hot topic of discussion on different TV channels.

In most cases, a layman remains in much confusion about how to safely invest in the stock market. So, here we are going to give you a basic idea about the stock market which would serve as a very helpful tool for beginners to invest their money in the right place.

But first, let us clarify some fundamental queries:

1): What is a stock market?

To explain it in short, the stock market is a registered exchange where public limited companies can enlist their names for share transaction with the public by following some terms and conditions. By investing in the listed companies, the shareholder gets a legal ownership by sharing profit, loss or dividend by the enterprise.

2): How can you invest in shares for the first time?

For investing in the stock market, one must follow the below given steps:

• The perspective investor must possess a PAN card –Permanent Account Number issued by the income tax department.

• While a Demat Account is used for holding the shares, a Trading Account is required for buying and selling shares. So, both these accounts need to be opened in the name of the investor.

• Contact a broker –A well-reputed share broker will handle all your transactions and also guide you on where to invest.

• A Depository Participant is needed as it will act as an intermediary between the depository and the investor. In India, NSDL and CDSL are the two Depository Participants. They will hold all the shares you bought and release the shares you sold.

3): Different ways of investment:

Other than the above basic requirements, you have to decide how and where you will invest.

Investing in shares can be mainly categorised into these three types:

1) Long-term investments which are based on fundamentals.

2) Short-term or very-short-term investments which are based on historical charts.

3) Speculative investments which are based on future option calls. These kind of investments give the investor the right to buy shares in future date, also giving him the right to sell but not the compulsion to sell the shares.

A few tips on safe buying of shares:

• Always buy shares of a good company at a lower bottom price and sell them when the price goes high.

• Purchase shares of industry leaders like Hindustan Unilever Ltd.

• Look out for shares of industries which have great future prospects like solar energy, electric-powered car manufacturing companies etc.

• Always restrict the total number of stocks within 15 and monitor them daily.

• Watch out the society trends. For example, today air-conditioners have become a necessity, so an air-conditioner manufacturing company would have better future prospects.

• Closely inspect the balance sheet of the company you invest in.

• Never follow the crowd.

• Hold on to your shares, don't rush for profits.

• Buy as soon as a stock makes new highs after a normal reaction.

• Trade only in active stocks (Daily Traded Stocks).

• Never buy a stock just because it has registered a big fall nor sell it because it is high priced.

• Prepare a chart of the invested companies for the price movement in a bar chart form and identify the resistance and breakout/breakdown of a share in the pattern on a daily basis.

• Last but not the least, partially take out profit from the investment on a regular basis and re-invest in a new scheme.

So friends! Go through the above information and begin to think rationally. Investment in the stock market can make a big difference in your capital gains, so make up your mind for a fruitful investment plan in the stock market.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of merinews.com. In case you have a opposing view, please click here to share the same in the comments section.
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